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Solar sell-off

April 17th, 2008 · 1 Comment

There is quite a sell-off going on in the solar sector, and as always, the companies move more or less in lockstep. When there is selling, it is usually so fast and furious that there is basically no time to distinguish the good from the bad (and the downright ugly).

It’s women and children first, shoot first, ask questions later kind of sell-off. We think some names (like FSLR) were due for a correction. There has been a pretty long rally in many of them since that absolutely brutal sell-off in the first six weeks of this year.

So time to take a breather. The funny thing is, the news out today is not all bad. Yes, there are problems at one solar company that reported earnings today (SPWR), they guided a little lower and with their valuation, there is virtually no margin of error.

But, the news was not all bad. The US Senate passed a bill (in pretty emphatic way: 88-8) for the renewal of tax benefits for alternative energy, including solar energy. Since the uncertainty surrounding these tax breaks was used as an excuse for previous sell-offs, one could argue that it should have helped today.

But it didn’t. The result was highly expected and priced in already. A good example of buy the rumor (as has been happening the past weeks), sell the news.

Where does that leave our favourite solar play Trina (TSL)? It didn’t break it’s 200 day moving average, but, unless we have a major correction in the markets, I don’t think we will go down much further from here either. So we stay on the fence, for now.

Tags: Solar sector · TSL

1 response so far ↓

  • 1 Chris Moran // Apr 17, 2008 at 9:28 pm

    Nice writing style. Looking forward to reading more from you.

    Chris Moran